The 0.25 per cent interest rate cut was welcomed by West Midlands CBI members yesterday, against a contrasting background of fairly buoyant capital investment and possible redundancies
Regional chairman Geoff Percy said, after a meeting of the organisation's West Midlands Council, that business leaders were holding their nerve and refused to be talked into a recession but that was not a rejection of economic indicators.
"Business is slightly less confident about the economic outlook but there is also optimism as there is still some growth," said Mr Percy.
"But some members are struggling, particularly in property and construction."
Mr Percy said the rate decrease was an appropriate level of reduction and the Monetary Policy Committee had taken the right decision.
With sound fundamentals already in the economy it was now charting its way towards a soft landing rather than a hard one.
The CBI is forecasting nationally that GDP will come in below two per cent in 2008 compared to the three per cent at the end of last year.
"The single biggest factor affecting growth is insufficient demand because people are feeling more cautious but on the other hand employment numbers are holding up. There is no panic," said Mr Percy.
But fears about jobs had increased since last December.
He said: "It is interesting that the level of reported capital investment over the next 12 months and the level of optimism around has remained intact. There is a tenuous link between capital investment and potential job cuts but it may be too early to call it a direct link."
Chris Clifford, director of West Midlands CBI, said: "We may not need as many people as we have now.
"There are businesses desperately seeking skilled workers and they cannot get hold of them, including posts in scientific, finance, sales and marketing but it will be those businesses at the lower skill levels that will suffer."
Businesses in the UK were spending £33 billion annually on training but it was immigrant labour who had saved the situation for many companies, not because of low wage costs but as a result of their high skills.
There was no record of how much was being spent on remedial training to bring school leavers to the level they should already have reached.
Some companies had seen improvements to the average selling price of their products despite higher input costs coming through the supply chain.
Mr Clifford said: "The intentions for capital investment are looking fairly buoyant.
"Companies are saying they will increase it over the next 12 months and while that makes them more efficient it means they are then reducing the payroll. It is the outlook for jobs decreasing and capital investment increasing."